Medical aid plan downgrades increase as tough economy bites

In an average year, only two to three percent of Alexander Forbes Health medical aid members change plans, either upgrading or downgrading, but these figures have more than doubled in the past two years.

In 2018, Alexander Forbes Health saw a 5.2% of their clients making changes to their plans - almost equally up and down, and in 2019, there was a 6.7% average, reflecting a 3.8% downgrade and 2.9% upgrade.

Health expenditure inflation in South Africa is rising faster than consumer inflation, and over the past five years, has outstripped CPI inflation by up to four percent. However, the 2019 contribution increases for some schemes are above this long term average, highlighting a concerning trend, says Tracy Janssens, Branch Head at Alexander Forbes Health.

Alexander Forbes Health delivers healthcare consulting advice and member support services to over 600 corporate clients.

“We target members we feel are on the wrong plans. This year 8.2% of people listened to our advice instead of our previous success ratio of five percent. On average we saved families R1 630, so people are clearly taking note of where they can save money,” Janssens said.

“This is the first year we have seen a big shift in the number of downgrades, and the reason for this is economy. Even executives have started questioning their medical aid costs, and the feedback to brokers is that it is unaffordable to continue on high cover plans that many people are not using.” Plans which offer good hospitalisation, with a small day to day benefit are most popular.

“Retrenchments also result in downgrades and we are seeing a lot of people completely cancelling their medical aid. Other trends are that families put their younger, healthier members on lower plans, while blue collar workers keep sick kids covered and remove healthy ones.”

Janssens said many people were choosing income based plans – capitation plans – which offered primary healthcare services.

“Where people work for corporates that offer more than one medical scheme, we have seen quite a few people switching between the schemes to something which has less lifestyle benefits and more healthcare benefits. People are cutting the nice-to-have loyalty and wellness programmes which have associated costs if they are not using the benefits.”

Other trend is people downgrading their medical aid plan and topping it up with gap cover. “These products are seeing growth, and three to five percent of the people who changed plans added a gap cover product.”

Janssens said brokers were essential to help members reduce cost through education of benefits, and the appropriate use thereof. “High risk members should also be encouraged to take advantage of the screening and prevention benefits to detect any health conditions early. “